Celhart Pulp and Paper Mill

completed

Summary Of Project Information (SPI)Project NameBulgaria-Celhart Pulp and PaperRegionEurope SectorProject No008969Projected Board DateJuly 20, 1998Company NameCelhart Pulp and PaperTechnical Partner and/or Major Shareholders The major shareholder is Isiklar Holding, a Turkish industrial group involved in sack paper processing and marketing.Project Cost Including proposed IFC investment Total project cost is estimated at US$42 million. IFC''s proposed investment includes: (i) a senior loan of up to US$15 million, and (ii) an equity investment of up to US$1.5 million.Location of project and Description of site The project will be located in a rural region near the town of Stamboliyski, 100 km southeast of Sofia. The mill produces semi-chemical and unbleached kraft pulp, which are further processed into fluting (corrugating medium) and into sack paper on two paper machines, and paper sacks on a sack converting line. The annual design capacities of the Celhart mill are 45,000 tons of pulp, 55,000 tons of paper and up to 120 million sacks, depending on type. The Company’s core business is sack kraft paper, which is mainly sold in the Bulgarian market. The present paper production is around 40,000 tons per year.Description of Company and Purpose of Project Through the proposed investment, IFC will assist in the completion of an important privatization and in the modernization of a post-privatized company. The Project encompasses a significant modernization of existing assets which would result in assisting an existing company to be viable and internationally competitive in the long run. The Project is export-oriented and, as such, will increase the foreign exchange earnings of Bulgaria. In addition, the Project will upgrade the Company’s environmental practices to meet the World Bank environmental guidelines. Finally, since the Company is the largest source of employment in the town of Stamboliyski, the Project will allow the Company to continue to employ a large portion of the town’s population. The proposed IFC investment is crucial for the project’s viability. The Company is unable to obtain long-term project financing from private sources without the investment from a multilateral institution such as IFC.     Environmental Category and Issues This is a category B project according to IFC''s environmental review procedure. Potential environmental, occupational health and safety issues which were examined during the environmental review of this project include: air, water and solid waste emissions and management; water and land contamination from prior activities; forest management and harvesting practices and sustainability of forests and forest communities; handling of hazardous materials; fire protection and emergency response; and general worker health and safety. Air emissions from this facility do not pose a major problem, and the sponsor will ensure that World Bank Group guidelines are met through the upgrading to be carried out under this project. In particular, the recovery boiler will be modified to ensure that sulphur emissions meet World Bank Group guidelines. Waste water is comprehensively treated to meet World Bank Group guidelines. The project will include a variety of measures to improve environmental conditions and conserve energy and water. Improvement of health and safety measures and fire protection throughout the plant will be carried out. Wood supply is from forests which are managed for sustainable yield and protection and enhancement of biodiversity. The sponsor has prepared an environmental action plan for implementation over the period of the project, to ensure compliance with World Bank Group policies and guidelines.   The is available from the Infoshop Date SPI sent to Infoshop June 19, 1998“This Summary of Project Information is prepared and distributed to the public in advance of consideration of the proposed transaction by the Corporation’s Board of Directors. It is provided for the purpose of enhancing the transparency of IFC’s activities and should not be construed as presuming the outcome of IFC Board consideration.”For Additional Information contact: Corporate Relations Unit -telephone: (202) 473-7711facsimile: (202) 974-4384Environmental documents for this project are available at http://www.ifc.org and from the World Bank InfoShop (http://www.worldbank.org/html/pic/aboutinfo.html).